) second-quarter 2013 earnings of 35 cents beat the Zacks
Consensus Estimate by a penny.
Trimble's second-quarter revenues of $576.3 million were up
3.6% sequentially and 11.3% year over year, within the guided
range of $575-$580 million.
Strengthening U.S. commercial and residential construction
markets helped Trimble's business in the last quarter. Trimble
has also made a number of acquisitions in the recent months,
which are helping it to build a strong product portfolio and
position itself in markets with better growth prospects.
Revenues by Segment
The Engineering and Construction (E&C), Field Solutions
(TFS), Mobile Solutions (TMS) and Advanced Devices (AD) segments
generated 54%, 20%, 20% and 5% of the total revenue,
unit revenues of $313.4 million were up 17.5 % sequentially and
10.3% year over year. The year-over-year increase was
attributable to higher sales of heavy and highway and building
construction products due to a revival in the residential and
commercial market. The most important markets within E&C are
heavy and highway, large-scale commercial, smaller-scale
commercial and housing as well as survey instruments. Of these,
the survey instruments business is currently under pressure due
to unfavorable weather and economic uncertainties in Europe,
political conditions in China and increased caution regarding
government purchases in the U.S.
BIM-enabled tools are gaining traction as commercial and
residential markets in the U.S. improve slowly. Trimble believes
that it will witness strength in these markets at the end of 2013
and in 2014.
revenues of $115.9 million were down 21.4% sequentially and 6.1%
year over year. Unfavorable weather and government
sequestration-related uncertainties impacted revenues in this
segment. Government spending has a significant impact on GIS
sales. The agricultural business outside North America was up in
strong double-digits from the year-ago quarter. But the unusual
weather condition delayed the sowing season, impacting sales in
North America and also in Europe.
revenues of $115.5 million were up 4.9% sequentially and 41.9%
from the comparable quarter of 2012. While the core business
contributed to growth in the last quarter, most of the increase
was the impact of acquisitions specially in the transportation
and logistics market.
segment was down 0.4% sequentially but up 10.0% from the year-ago
quarter. The improved performance was on account of stronger
sales of military and RFID components and subsystems.
Revenues by Geography
North America remains the largest segment for Trimble, with a
56% revenue share. Revenues from the region were up 5.5%
sequentially and 13.4% from the year-ago quarter, reflecting
continued recovery in the market.
Approximately 23% of revenues came from Europe, which was down
0.7% sequentially but up 22.0% from last year.
The Asia/Pacific region accounted for 14% of Trimble's
revenues in the second quarter, up 3.6% sequentially but down
8.3% year over year.
The rest of the world contributed 7% of the total revenue, up
3.6% sequentially and 11.3% year over year.
Trimble's gross margin for the quarter was 52.5%, up 88 basis
points (bps) sequentially and 75 bps year over year.
Trimble reported operating expenses of $237.5 million, up 3.1%
sequentially and 13.8% from the year-ago quarter. The operating
margin was 11.3%, up 111 bps sequentially but down 12 bps year
over year. All expenses (R&D, S&M and G&A) decreased
sequentially as a percentage of sales. However, R&D increased
significantly from last year although other expenses were
Pro forma net income was $91.8 million or a 15.9% net income
margin compared to $90.0 million or 16.2% in the previous quarter
and $85.3 million or 16.5% net income margin in the year-ago
quarter. The pro forma calculations in the last quarter exclude
restructuring charges, amortization of intangibles and
acquisition-related costs and other adjustments on a tax-adjusted
basis. Our pro forma estimate may not match management's
presentation due to the inclusion/exclusion of some items that
were not considered by management.
On a GAAP basis, the company recorded a net profit (for
Trimble shareholders) of $54.6 million (21 cents per share)
compared to $49.8 million (19 cents per share) in the previous
quarter and a net profit of $53.7 million (21 cents per share) in
the comparable prior-year quarter.
Inventories were down 0.7% sequentially to $258.7 million.
Days sales outstanding (DSOs) were down from around 64 to 56.
Trimble generated $172.0 million of cash from operations. The
company spent $179.0 million on acquisitions, $39.4 million on
capex and did not repurchase any shares in the last quarter. The
cash position at quarter-end decreased $14.5 million to $129.1
million. Long-term debt at quarter-end stood at $789.6 million,
down from $829.3 million in the first quarter.
Management expects third-quarter revenues in the range of
$555-$565 million. Earnings on a GAAP basis are expected to be 18
cents-20 cents per share and on a non GAAP basis 36 cents-38
cents per share. The calculation of non-GAAP EPS excludes
one-time charges such as amortization of intangibles of $42.0
million and stock-based compensation of $9.3 million. The tax
rate is expected to be in the range of 16%-18% while share count
is likely to be 261.0 million.
Trimble is seeing much stronger construction markets and a few
of its businesses have started seeing normal seasonality.
Additionally, management initiatives, such as the lowering of the
cost structure, strategic acquisitions, product enhancements and
international expansion appear to be paying off. The softness in
certain areas of the business is related to macro concerns and
the nature of new business acquired. However, quite a significant
amount of its business, whether directly or indirectly, is
dependent on government spending in the U.S., which has become
uncertain, at least in the near term. This could weigh on the
Trimble has a Zacks Rank #3 (Hold). Semiconductor stocks that
are worth considering include
Advanced Micro Devices
Microchip Technology Inc.
), all carrying a Zacks Rank #2 (Buy).
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